What is happening now?
DThe tax offices are now demanding the data they need for the new property tax. The owners only have time from July 1st to October 31st to submit their declaration. The basis is the ownership situation as of January 1, 2022. The focus of attention is the so-called property tax B for all land and buildings that do not belong to agriculture and forestry. These fall under property tax A – with the exception of residential areas, which will also be taxed with property tax B in future. In total, the owners of 36 million “units” are affected.
Who is paying?
Basically, the owners transfer the money to the tax office. But that does not mean that the tenants are off the hook, on the contrary: the property tax is one of the things that are passed on with the utility bill. This is also the intention of the tax system. Every inhabitant should at least have a little share in the community’s costs, according to the motto: If you want a public swimming pool that doesn’t pay for itself, you have to pay a correspondingly higher property tax.
How do I know I have to do something?
In many cases, the tax authorities write to the owners to draw their attention to the fact that they must submit a declaration. But there doesn’t have to be such a personal approach. At the end of March, the federal government publicly announced that this obligation exists in eleven federal states. Not all of them are because Baden-Württemberg, Bavaria, Hamburg, Hesse and Lower Saxony have used the new opportunity to pass their own property tax laws. In Saarland and Saxony, the federal model was only slightly modified. As a rule, the tax offices require that the declaration be transmitted electronically.
What does the tax office need?
In the federal model, the tax authorities normally require six pieces of information: location of the property, property area, standard land value, type of building, living space, year of construction of the building.
How is the declaration to be made?
Usually digital. There are exceptions for hardship cases. In Bavaria, everyone has the opportunity to fill out a green paper form by hand.
When does the new regulation apply?
It starts with the new taxation in 2025. The tax offices and municipalities take much more time than they give the taxpayers. They can do that because the Federal Constitutional Court, which is responsible for the new regulation, was surprisingly generous with the transition period.
How important is the reform for the cities?
With a revenue of around 15 billion euros, it is an important source of income for the municipalities. Added to this is the political importance. Because the municipal council decides on the tax rate, which is a kind of tax rate. The cities have promised not to use the new regulation to enrich themselves. This is a political statement that does not legally bind any local council.
How will future calculations be done?
In the federal model – which Olaf Scholz (SPD) developed when he was not yet Chancellor but Federal Minister of Finance – three variables are still decisive: property tax value, tax index and assessment rate. First, the tax offices calculate the first value using the electronically submitted data. It will be higher than the old unit values from 1964 in the West and 1935 in the East, since land and building values have gone through the roof since then. The tax index depends on the type of use. Even if the age of the buildings is taken into account, it can be assumed that the starting value for the calculation will be consistently higher. This was taken into account in the reform, so the statutory multiplier tax number is then about ten times lower.